Where is materiality not used in providing financial information?

a. Applying the revenue recognition principle.

b. Determining what items to include in the financial statements.

c. Applying the going concern assumption.

d. Determining the level of disclosure.

113. What is conservatism?

a. Understating assets and net income.

b. When in doubt, recognizing the option that is least likely to overstate assets and income.

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er as
c. Recognizing the option that is least likely to overstate assets and income.

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d. Recognizing revenue when earned and realized.

o.
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114. Expensing the cost of copy paper when the paper is acquired is an example of which
constraint?
a. Materiality.
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aC s

b. Cost-benefit.
vi y re

c. Conservatism.
ed d

d. Industry practices.
ar stu

115. Which of the following statements concerning the cost-benefit relationship is not true?
a. Business reporting should exclude information outside of management's expertise.
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b. Management should not be required to report information that would significantly harm

the company's competitive position.

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c. Management should not be required to provide forecasted financial information.

d. If needed by financial statement users, management should gather information not

included in the financial statements that would not otherwise be gathered for internal use.

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 116. Under Statement of Financial Accounting Concepts No. 2, which of the following relates
to both relevance and reliability?
a. Cost-benefit constraint

b. Predictive value

c. Verifiability

d. Representational faithfulness

117. Charging off the cost of a wastebasket with an estimated useful life of 10 years as an
expense of the period when purchased is an example of the application of the
a. consistency characteristic.

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b. matching principle.

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c. materiality constraint.

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d. historical cost principle.
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118. Which of the following statements about materiality is not correct?

a. An item must make a difference or it need not be disclosed.
aC s
vi y re

b. Materiality is a matter of relative size or importance.

c. An item is material if its inclusion or omission would influence or change the judgment of
ed d
ar stu

a reasonable person.

d. All of these are correct statements about materiality.

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Th
sh

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 104. Obtaining feedback is generally identified most directly with which of the
functions of management?
A. Planning C. Controlling
B. Directing and motivating D. Decision making Bobadilla

105. A staff position:

A. relates directly to the carrying out of the basic objectives of the
organization.
B. is supportive in nature, providing service and assistance to other parts of
the organization.
C. is superior in authority to a line position.
D. none of these. Bobadilla

106. The controller occupies:

A. a line position.
B. a staff position.
C. neither a line nor a staff position, since the accounting department must be

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independent.

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D. both a line and a staff position. Bobadilla

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o.
107. “Racing with no finish” refers to
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A. developing the best selling product.
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B. research and development.

aC s
vi y re

C. benchmarking and continuous improvement.

D. designing the highest quality product in a given segmented market.

ed d

Bobadilla
ar stu
is

108. A company’s value chain reflects the

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A. organizational levels of authority and responsibility.

sh

B. stages of production from raw materials to finished goods.

C. linked set of activities that increase the value of products or services.

D. sales distribution network for the company’s products and services.

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 Bobadilla

109. The process of comparing, investigating, and evaluating the company’s

processes or products against the best level of performance is known as

A. attestation. C. product review.

B. feedback. D. benchmarking. Bobadilla

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110. Benchmarking allows managers to:

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A. determine who in the industry performs similar processes most effectively.

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o.
B. determine the processes that have high value-to-cost relationships.
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C. compare certain internal processes, services and activities to those of other

companies in order to identify strengths and weaknesses.

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aC s
vi y re

D. reproduce another company’s product design and manufacturing processes

to eliminate competitive advantage. Bobadilla

ed d
ar stu
is
Th
sh

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